As I inhaled vast amounts of coffee this morning, I came across this article in the New York Times about Estee Lauder and how the company is looking to revitalize the aging brand by moving into new markets. There were a few interesting portions of the article, which I’m including below (with comments):
“But the company’s specialization in high-end cosmetics has also limited its ability to compete with companies like Procter & Gamble or L’Oréal, which have more diversified product lines. And, over the last few years, some department stores have consolidated, closing dozens of locations nationwide.” Specialization vs. diversification– the age-old question. I think that, especially in this age of recession (are we officially ‘post-recession’ yet?), diversified companies are better situated to weather economic ups and downs. There is a theory that we’ve come across that luxury brands actually do well during recessions. While this may be true to a certain extent, the concept of what luxury actually is, is changing, and consumer brand loyalty is shifting as well. My vote goes for diversification.
“Although some Lauder brands have been increasing their presence in specialty stores and shopping channels like QVC, Mr. Lauder says the company will never embrace mass-market distribution. He remains as committed as ever to department stores, citing examples like Bloomingdale’s and Lord & Taylor where the company has been updating its displays and marketing techniques to attract new customers.” Interesting– I personally haven’t stepped foot in a department store in years. And if/when I do, the makeup counter area is one that I avoid at all costs. If I do need to get by, I power-walk my way through, no eye contact. The displays might be great, but the aggressive over-selling turns me off. Lesson– if you’re going to commit to department stores, make your counters welcoming. According to the article, if you pick up a basket while browsing, the clerks won’t aggressively push you to buy anything. Um, OK. But what if I didn’t know that, and I don’t want to carry around a basket on my arm??
This made me think– is the department store a dying channel, or does it still hold relevance? Sure, Clinique may have the ‘Clinique Smart Bar’, which is a tablet computer that customers can use to find out information about skin conditions. But what if I can’t make it to Bloomingdale’s to actually use that computer in person? I understand that Estee Lauder is targeting the luxury consumer, but aren’t they all online too these days? New markets today don’t have to be restricted to geography. What about online? What about going after the younger consumer? It seems to me that these are questions that luxury brands will need to answer, and soon.